According to a report by Wood Mackenzie, China, the world’s largest steel consumer accounting for 49 percent of global demand, is expected to face an average annual decline of 5 to 7 million tons of steel consumption over the next decade. This significant shift creates major challenges regarding overcapacity, while at the same time opening opportunities for India and Southeast Asia to become the new engines of growth.
Mr. Charvi Trivedi, Senior Research Analyst for Steel and Raw Materials at Wood Mackenzie, said:
“China’s share of global steel demand is forecast to decline from 49 percent in 2024 to 31 percent by 2050. Meanwhile, India and Southeast Asia are emerging as the main drivers of growth; India alone is expected to triple its consumption and increase its market share from 8 percent to 21 percent by 2050.”
⸻
Geographical Shift in Demand Centers
China’s economic transition away from infrastructure-driven growth has created lasting headwinds for steel demand. Real estate development, once the cornerstone of steel consumption, is now facing prolonged weakness. Construction activity remains at low levels as policymakers prioritize economic balance over growth at any cost.
Trivedi added:
“China’s steel overcapacity crisis has reached unprecedented levels, with the surplus expected to rise from 50 million tons in 2025 to over 350 million tons in the long term. While this has led to reduced production in key provinces such as Shandong and Jiangsu, China’s massive production infrastructure means it will remain a dominant force in global supply dynamics, even with a potential decline of 240 million tons in production between 2024 and 2050.”
⸻
Future Growth Driven by India and Southeast Asia
In contrast to China’s contraction, India’s steel market grew by 8 percent in 2024 and is forecast to grow by over 7 percent in 2025, supported by infrastructure development and manufacturing expansion. According to Wood Mackenzie, long-term fundamentals remain strong, with compound annual growth of 4 to 5 percent expected through 2050.
Infrastructure investments form the bulk of India’s steel demand growth. Government initiatives in transportation, urban development, and renewable energy have created sustainable consumption opportunities. Expansion of the manufacturing sector, especially in automotive and machinery, also drives further demand.
Trivedi said:
“Southeast Asia is following a similar upward trajectory, with 6 percent growth in 2024 and a forecasted 4 percent in 2025. The region is expected to sustain compound annual growth of 3 to 4 percent until 2050. Its share of global demand is projected to double from 5 percent to 10 percent by 2050, with Vietnam, Thailand, and Indonesia leading the region’s steel demand growth. These markets are experiencing rapid industrialization while maintaining cost advantages compared to developed economies.”
⸻
Global Redistribution of Production Centers
According to Wood Mackenzie, global crude steel production is expected to grow moderately at a compound annual rate of 0.7 percent by 2050, as developed economies face stable or declining output. This rebalancing is creating new competitive dynamics and trade relationships.
India is projected to nearly triple its steel production and become the world’s second-largest producer by 2050. Its integrated steel plants benefit from domestic iron ore resources and strong internal demand. Investments in modern production technologies are improving efficiency and performance.
Growth in Southeast Asia also benefits from proximity to key raw material resources and lower labor costs, creating competitive advantages in supply chain positioning. New capacities are largely focused on electric arc furnace technology and downstream processing capabilities. Regional producers are targeting both domestic markets and export opportunities. Meanwhile, China, while maintaining global leadership, faces structural hurdles as overcapacity pressures drive consolidation and efficiency improvements.
⸻
Trade Tensions and Realignment of Steel Supply Chains
According to Wood Mackenzie, global steel trade volume will reach 381 million tons in 2024 but is expected to decline by 5.4 percent this year.
The main reason for this drop is the growing trade barriers against Chinese steel exports and intensified protectionist measures. Chinese exports face increasing restrictions in key markets through anti-dumping tariffs and safeguard measures, while domestic overcapacity pressures persist.
With the rise of protectionist policies worldwide, it is forecast that in the long term only 12 percent of global steel production (in terms of crude steel) will be exported—down from the current level of 25 percent. This reflects a gradual move toward more regionalized supply chains and reduced trade intensity. Regional trade agreements and bilateral relations will gain greater importance in steel trade flows, as geographic proximity and existing partnerships sustain trade despite broader protectionist trends. However, the potential implementation of carbon border taxes in the future will structurally hinder exports from high-emission steel producers.
⸻
Policy Support: A Critical Factor in Industry Transition
According to Wood Mackenzie’s global steel industry transformation scenario, China alone will face over 350 million tons of surplus capacity by 2050, much of it concentrated in carbon-intensive blast furnaces. Even in advanced economies where electric arc furnace (EAF) adoption is a policy priority, progress has been uneven. In Europe, out of the 75 to 80 million tons of newly announced EAF capacity, only 20 to 25 million tons are under construction, while 15 to 20 million tons have been suspended or canceled—highlighting the widening gap between long-term climate goals and short-term economic realities.
Rising inflation, weak steel demand, and margin pressures have placed financial strain on major companies, making it harder to finance capital-intensive green steel projects. Trivedi concluded:
“A combination of economic barriers, insufficient policy support, and limited markets for premium green steel has curbed the industry’s appetite for decarbonization. Current market conditions require stronger government support and clearer regulatory frameworks to accelerate the sector’s transition toward sustainable production methods.”
